Toshiba To Exit Nuclear Plant Construction Business

Toshiba is preparing to put an end to its nuclear power plant construction business as part of damage control measures following a huge write-off on its U.S. nuclear operations.

This is what unnamed sources close to the company told media, adding that from now on, the conglomerate’s nuclear operations will be restricted to maintenance and decommissioning. Still, Toshiba will complete the ongoing work on four new NPPs in the U.S., which should be put into operation in 2020.

The write-off that may bring down Toshiba’s nuclear business has been estimated at US$6.08 billion and is related to its 2015 acquisition of U.S. CB&I Stone & Webster. The size of the acquisition deal, closed by Toshiba’s U.S. subsidiary Westinghouse, was just US$229 million.

However, the low value of the company came with risks, as the New York Times recalled in a report last month, as the buyer and the seller, Chicago Bridge & Iron Company, argued over the true value of CB&I Stone & Webster. Cost overruns and delays threatened the successful completion of the target company’s construction projects, and the two parties to the deal could not reach an agreement as to who should shoulder the associated expenses.

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The blow from the bad deal with Chicago Bridge & Iron seems to be so serious that Toshiba is mulling over the sale of Westinghouse, again according to unnamed sources. A sale would limit its exposure to future losses associated with nuclear power projects in the U.S., as would a partial stake sale, the sources explained.

Yet Westinghouse itself is not in the most rosy of conditions and it would be a tough job to find a willing buyer, the Japan Times notes. Toshiba took a US$2.3-billion write-down on the Westinghouse acquisition last year, after buying it for US$5.4 billion in 2006.

By Irina Slav for Oilprice.com

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